Has Russia’s economy really reached the verge of recession? Economy Minister gave warning

Russia Economy: Russia’s economy has reached the verge of recession. On Thursday, Economy Minister Maxim Rachatikov gave this information at the St. Petersburg International Economic Forum. Along with this, he warned that if no step is taken soon, it will be difficult to postpone the recession.

Russia cuts interest rates

After 2022, Russia has cut interest rates this month. The cost of borrowing from this has come down from 21 percent to 20 percent. Its purpose is to promote investment by reducing the cost of borrowing. However, this is still nothing special, so businessmen are reluctant to take loans.

Due to the high interest rate for the last several months, investment has decreased, due to which the pace of economic development has become sluggish. Meanwhile, Central Bank Governor Elvira Nabiulina said that the kind of situations of businesses here seems to be on the verge of recession already.

Alexander Vadyakhin, the first deputy CEO of Serbank, Russia’s largest bank, said in an interview to Reuters this week, Russia’s strict monetary policy is creating a risk of recession for the economy here. He suggested that the interest rate of up to 12-14 percent can prove to be a comment to promote investment.

This is also a big reason for recession in Russia

The second biggest reason for the recession in Russia is the rust with Ukraine. Due to this, inflation has increased considerably here. There is an atmosphere of tension between the two countries for the last three years. Due to this battle, interest rates have been increased, so that inflation remains under control. But despite this, inflation remains close to 9.5 % in 2024 and 9.8 percent in 2025. From potato-onion to other vegetables, the prices of eggs have also increased. Due to the youth, many citizens are leaving the country. This has caused a huge shortage of labor. People are migrating in search of better opportunities. This is affecting production.

Russia’s focus is on defense

Due to the war with Ukraine, Russia doubled its expenses on defense in 2023. In 2024 too, Russia increased the defense budget and in 2025 also Russia’s Parliament Duma approved the Defense Budget of Rs 10 lakh 67 thousand crore ($ 126 billion). Now it is obvious that most of the budget will be spent on defense sector, then money will be less for basic things like education, health, infrastructure.

Export revenue reduced

Apart from this, more than 45 countries have been banned by more than 45 countries by 2024 due to attack on Ukraine. Since Russia’s economy is very much dependent on oil and gas exports, these restrictions have damaged the economy of Russia as the revenue from export is decreasing.

In 2023, Russia’s exports fell from $ 436 billion to $ 394 billion as against 2018. In 2024 too, Russia’s exports were 1.72 percent lower in a year ago. In May 2025, Russia’s revenue was reduced by US $ 0.48 billion to US $ 12.6 billion as compared to the export of oil and petroleum products. This is US $ 4 billion lower than in May 2024.

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